Search:
gov.il
all government
Search  
Home Page
Ministrise And Authorities
Guides
Subjects

gov.il Welcome to the Israel Government Portal gov.il
 Israeli Government Portal  
New Tax Reform for New Immigrants and Returning Citizens


The Ministry of Finance approved a new tax reform formulated by the Tax Authority and the Ministry of Immigration Absorption as part of the "Returning Home for Israel's 60th" campaign to help you with your Aliyah and assist you in making Israel your new home.

The reform is one more benefit the Ministry of Immigrant Absorption initiated for Israel's 60th anniversary, all intended to ease the return of Israelis living abroad and the absorption of new immigrants. Taxation experts regard the new reform a complete revolution in terms of tax benefits, with both significant exemptions for new immigrants and returning citizens, and comparing the status of returning citizens to that of new immigrants.

The benefits part of the new reform
Following is a detailed outline of the proposal, explaining the guidelines for the various tax exemptions available to you as new immigrants or returning citizens:

 New tax status for returning residents
A new tax status - “a returning resident classified as a new immigrant for tax purposes”, will expand tax benefits given to returning residents. The new status will be given to individuals who:
- Resided overseas for at least 10 years from their departure from Israel
- Resided overseas for 5 years and returned to Israel during 2007-2009
- Were considered foreign residents on January 1st 2007

 Tax Exemptions for Companies Managed by Returning residents or New Immigrants
Returning residents or new immigrants who own and manage a foreign company that is active abroad, or own its shares, will no longer be automatically subject to Israeli taxes. Thus, the company will be able to continue generating tax-free revenues, so long as these revenues are not generated in Israel. 

 Exemption from Reporting Earnings from abroad
Returning residents or new immigrants, and the companies that are under their direction, are not obligated to report earnings that benefit from exemption. Only income from activities in Israel and from Israeli investments and assets that is generated following Aliyah or return to the country is subject to reporting and taxation according to regular tax laws.

 Expansion of tax benefits for returning citizen and new immigrant
Returning residents and new immigrants will be exempt from taxes for ten years on income generated outside Israel. This covers all income, active or passive, such as interest, dividends, pensions, royalties and rental of assets. All income, whether from the realization of assets and investments abroad or from regular income abroad, is tax exempt.

 Pension benefits for returning residents and new immigrants
New immigrant will be exempt from paying taxes on their pension. Returning residents will be exempt from paying taxes on their pension for a period of 10 years.

 Tax benefits for new immigrant
New immigrants will enjoy tax deductions based on the following division:
- During their first 18 month- 3 tax credit points.
- During the following year- 2 points.
- During the third year- 1 point.

 Tax benefits for new immigrants on interest from foreign currency deposits
New Immigrants are entitled to exemption from paying tax on interest on foreign currency deposits for 20 years, so long as the source of those deposits is capital they possessed prior to their immigration, and which was deposited in an Israeli banking institution.

 An adjustment year
New immigrants and returning residents can fill an application form for an adjustment year. During the year they will not be considered Israeli citizens for tax purposes. At the end of the year, If they decide to stay in Israel they will enjoy all the benefits that are part of the new tax reform.


Summarization of the tax benefits before and after the reform:

Type of Benefit 

Past status

Present status

New Tax Status - a returning resident classified as a new immigrant for tax purposes

Did not exist

A new tax status expanding tax benefits given to returning residents and making them equivalent to the tax benefits given to new immigrants. The new status will be given to individuals who resided overseas for at least 10 years from the date they left Israel.

Exemption on passive income (interests, dividends, rentals etc.) for new immigrants and returning residents

Granted to new immigrants only for a 5-year period

 

Granted for a 10-year period for new immigrants and returning residents. The exemption includes income from professional work and salaries.

Exemption on income from professional work and salaries

Granted for four years only to new immigrants who owned a business 5 years prior to their Aliyah

Companies managed by new immigrants

Did not exist

Exemption from tax on income from companies that activate abroad and are managed by a new immigrant or returning resident, or else they own part of its shares.

Exemption from reporting  

Limited exemption

Full exemption on reporting exempted income.

Adjustment track for tax purposes

Did not exist

1year adjustment period from the date of arrival to Israel.



The state of Israel – at your service
More details and information to help you plan your arrival to Israel is available from many of Israel's governmental websites:

 The Israeli Tax Authority website offers detailed information regarding taxation in Israel as well as direct contact links for any questions you might have.
 You can join the "New tax reform" campaign or contact its special information center on The Ministry of Immigration Absorption website.
 The Ministry of Immigrant Absorption will provide you with an array of services and assistance to open a business in Israel and transfer business from abroad
 General information for new immigrants and returning citizens can be found on the gov.il portal, as well as a guide for investing in Israel.
 Learn about the special benefits offered by the National Insurance Institute of Israel for returning citizens on Israel's 60th anniversary.

This is your chance to come home. We are all looking forward to seeing you here with us.